Opinion
NO. 14-19-00202-CV
03-30-2021
Jeffrey D. CLINTON d/b/a Marathon Energy Management, Appellant v. Charles GALLUP, Appellee
If, following a bench trial, the trial court makes a single finding of fact that does not resolve any element of any of the multiple claims before the court, may this court review the sufficiency of the evidence to support the trial court's judgment? Concluding that Texas Rule of Civil Procedure 299 bars such review, we reverse and remand.
Appellee Charles Gallup brought this lawsuit to recover commissions on electricity contracts he alleged were owed to him by appellant Jeffrey D. Clinton d/b/a Marathon Energy Management. In his live pleading, which is his first amended petition, Gallup asserted claims for common-law fraud, quantum meruit, suit on a sworn account, and breach of contract. After a bench trial, the trial court found in Gallup's favor and awarded Gallup damages against Clinton of $13,861.00 plus court costs and prejudgment interest. The trial court also awarded Gallup attorney's fees of 13,062.00.
The trial court rendered a default judgment against two other defendants in the case, Jeff Adkins and Aldar Marketing, Inc., and awarded damages against them in the amount of $21,847.00. The attorney's fees were assessed jointly and severally against Clinton and Adkins. The trial court also awarded conditional attorney's fees in the event the judgment was appealed. Clinton is the only defendant to appeal.
At trial, the parties stipulated that dismissed party Hudson Energy had paid Clinton $1,3861.00. Gallup testified that this payment constituted commissions on accounts he had secured for Clinton, and that Clinton had agreed to pay him the commissions. Clinton testified there was no agreement with Gallup to pay him the commissions. Rather, Clinton testified that Gallup had been paid a finder's fee regarding the accounts at issue and was not owed the money Clinton received from Hudson Energy.
We begin with Clinton's issue three, which we determine is dispositive of this appeal. In this issue, Clinton argues that the trial court's findings of fact do not support the judgment. Rule of Civil Procedure 299 states the following concerning the import and review of findings of fact:
When findings of fact are filed by the trial court they shall form the basis of the judgment upon all grounds of recovery and of defense embraced therein. The judgment may not be supported upon appeal by a presumed finding upon any ground of recovery or defense, no element of which has been included in the findings of fact; but when one or more elements thereof have been found by the trial court, omitted unrequested elements, when supported by evidence, will be supplied by presumption in support of the judgment. Refusal of the court to make a finding requested shall be reviewable on appeal.
Tex. R. Civ. P. 299. The rule plainly states that findings of fact "shall form the basis of the judgment." Id. This does not mean that the trial court must make a finding as to every element of a cause of action. See id. So long as the trial court makes a finding as to at least one element of a cause of action, this court may presume the trial court made implied findings as to the remaining elements. See id. If, however, the trial court omits findings as to all elements of a cause of action, this court may not imply findings as to that cause of action. See id. Rather, "[i]f a ground of recovery or defense is entirely omitted, ... the omission is deemed to be deliberate" on the grounds that the trial court did not award relief as to that cause of action. Vickery v. Comm'n for Lawyer Discipline , 5 S.W.3d 241, 252 (Tex. App.—Houston [14th Dist.] 1999, pet. denied) (citing Tex. R. Civ. P. 299 ).
In this case, after Clinton requested findings of fact and conclusions of law, the trial court instructed the parties to submit proposed findings and conclusions along with their proposed judgments. Finding in Gallup's favor, the trial court signed the findings of fact and conclusions of law submitted by Gallup. These findings, however, contain only a single finding relating to Gallup's claims against Clinton:
The records of Hudson Energy on file reflect payment of commissions to Marathon Energy on the Plaintiff's accounts in the total amount of $13,062.00.
The trial court's sole finding relates to the parties' stipulation that Clinton, doing business as Marathon Energy, received money from Hudson Energy. This finding does not resolve any disputed fact concerning any element of any claim asserted by Gallup. Under these circumstances, this court cannot presume any findings relating to any of the claims at issue in this lawsuit. See Tex. R. Civ. P. 299 ("The judgment may not be supported upon appeal by a presumed finding upon any ground of recovery or defense, no element of which has been included in the findings of fact...."). Instead, this court can only conclude that the "basis of the trial court's judgment" was its apparent conclusion that the sole fact that Hudson paid money to Clinton, on its own, somehow entitled Gallup to relief. See id. (findings of fact "shall form the basis of the judgment upon all grounds of recovery and of defense embraced therein"); see also Jones v. Smith , 291 S.W.3d 549, 554 (Tex. App.—Houston [14th Dist.] 2009, no pet.) ("[E]xpressed findings made by a trial judge cannot be extended by implication to cover further independent issuable facts."). Under the constraints imposed by Rule 299 and the particular findings requested and made here, we can only determine the trial court committed an error of law.
The elements of common-law fraud are: (1) the defendant made a material representation that was false; (2) the defendant knew the representation was false or made it recklessly as a positive assertion without any knowledge of its truth; (3) the defendant intended to induce the plaintiff to act upon the representation; and (4) the plaintiff actually and justifiably relied upon the representation and suffered injury as a result. JPMorgan Chase Bank, N.A. v. Orca Assets G.P., L.L.C. , 546 S.W.3d 648, 653 (Tex. 2018).
The elements of quantum meruit are: (1) valuable services were rendered or materials furnished; (2) for the person sought to be charged; (3) those services and materials were accepted by the person sought to be charged, and were used and enjoyed by him; and (4) the person sought to be charged was reasonably notified that the plaintiff performing such services or furnishing such materials was expecting to be paid by the person sought to be charged. Hill v. Shamoun & Norman, LLP , 544 S.W.3d 724, 732–33 (Tex. 2018).
The elements of suit on a sworn account are: (1) the sale and delivery of merchandise or performance of services; (2) that the amount of the account is "just," that is, the prices charged are pursuant to an express agreement, or in the absence of an agreement, that the charges are usual, customary, or reasonable; and (3) that the outstanding amounts remain unpaid. PennWell Corp. v. Ken Associates, Inc. , 123 S.W.3d 756, 766 (Tex. App.—Houston [14th Dist.] 2003, pet. denied). The plaintiff must file the petition under oath. Tex. R. Civ. P. 185.
The elements of breach of contract are: (1) the existence of a valid contract; (2) the plaintiff performed or tendered performance as the contract required; (3) the defendant breached the contract by failing to perform or tender performance as the contract required; and (4) the plaintiff sustained damages as a result of the breach. USAA Tex. Lloyds Co. v. Menchaca , 545 S.W.3d 479, 501 n.21 (Tex. 2018).
Typically, we may ignore an immaterial finding by the trial court. Yazdani-Beioky v. Sharifan , 550 S.W.3d 808, 822 (Tex. App.—Houston [14th Dist.] 2018, pet. denied) ("[I]mmaterial findings are harmless and are not grounds for reversal."). In this peculiar circumstance, however, the fact that an immaterial finding is the sole finding changes its nature; when an "immaterial" fact becomes the sole fact on which we may review the judgment, that fact becomes material.
In accordance with Rule 299, this court has held that we will not presume findings when "the record reveals that the trial court based its judgment on an erroneous interpretation of law, and failed to answer a factual question necessary to resolve the case under a correct interpretation." Advanced Pers. Care, LLC v. Churchill , 437 S.W.3d 41, 47 (Tex. App.—Houston [14th Dist.] 2014, no pet.). When the trial court does not make findings that would control the case under a correct legal interpretation, and the proper findings cannot be presumed, the proper disposition is to reverse the judgment and remand the case for further proceedings. Id. at 49 ; see Jones , 291 S.W.3d at 555 (reversing and remanding when trial court "made findings of fact and conclusions of law relevant to an erroneous interpretation of law [precluding presumed findings under Rule 299 ], and did not make findings that would control the case under a correct legal interpretation"); see also Nguyen v. Nguyen , 355 S.W.3d 82, 92–93 (Tex. App.—Houston [1st Dist.] 2011, pet. denied) (citing Jones and reversing and remanding when trial court's express findings on one theory of informal marriage could not be extended by implication to cover independent issuable facts regarding second theory of informal marriage); Nautilus Ins. Co. v. Steinberg , 316 S.W.3d 752, 758 (Tex. App.—Dallas 2010, pet. denied) (citing Jones and reversing and remanding when trial court "did not make a finding on the element of intent that would control the case under the correct construction of the policy and interpretation of the law" and that finding could not be presumed).
Accordingly, we sustain issue three that the trial court's findings of fact do not support the judgment. We reverse the portion of the trial court's judgment that awards relief against Clinton and leave the judgment undisturbed as to the nonappealing defendants. See Sonat Expl. Co. v. Cudd Pressure Control, Inc. , 271 S.W.3d 228, 236–37 (Tex. 2008) ("Generally, reversal in favor of a party that appealed does not require reversal in favor of another who did not" unless "the rights of appealing and nonappealing parties are so interwoven or dependent on each other as to require a reversal of the entire judgment." (quotation omitted)). We remand the case for further proceedings. Tex. R. App. P. 43.3(a) ; see Jones , 291 S.W.3d at 555.
Typically, we would first address rendition issues; here, in issue four, Clinton argues that the evidence is legally insufficient to support any element of any claim made by Gallup. In Jones , however, this court declined to address legal-sufficiency issues in the absence of express or implied findings supporting the judgment, instead reversing and remanding for further proceedings. See 291 S.W.3d at 552, 555. Indeed, it is difficult to see how this court could conduct a meaningful review of the sufficiency of the evidence to support findings we have concluded do not exist and cannot be implied.
The remainder of Clinton's issues would not afford him additional relief, and accordingly we do not address them. Tex. R. Civ. P. 47.1. We note that, in his first issue, Clinton makes a somewhat related argument that the trial court erred when it did not make additional requested findings of fact per Clinton's request. See Tex. R. Civ. P. 298. Failure to make additional findings and conclusions may constitute reversible error if the appellant is prevented from adequately presenting the matter being complained of on appeal. See Zhang v. Capital Plastic & Bags, Inc. , 587 S.W.3d 82, 88–89 (Tex. App.—Houston [14th Dist.] 2019, pet. denied). Here, however, the issue is not that Clinton cannot formulate appellate issues; rather, the issue is that this court cannot presume findings that would allow for the review of arguments on the merits that Clinton might make.
( Jewell, J., dissenting). DISSENTING OPINION
Kevin Jewell, Justice
Appellee Charles Gallup asserted four claims against appellant Jeffrey Clinton d/b/a Marathon Energy Management. Following a bench trial, the trial court rendered judgment for Gallup in the amount of $13,861 plus court costs and attorneys' fees. The court signed findings of fact and conclusions of law the same day it signed the judgment. Although Clinton timely requested additional or amended findings, the court signed none.
The parties refer to Clinton and "Marathon Energy" interchangeably.
Clinton asserts five issue on appeal. The majority reverses the judgment and remands the case because it sustains Clinton's third issue, in which he argues that the judgment is error because the court's findings of fact do not address any of Gallup's claims against Clinton. The majority bases its judgment on its interpretation of Texas Rule of Civil Procedure 299 as applied to this case. Regrettably, I do not join that analysis; rather, I would sustain Clinton's first issue, in which he contends the trial court erred in failing to issue additional findings of fact showing the basis of the judgment. Accordingly, I would abate the appeal and instruct the presiding judge to sign additional findings of fact.
A. Relevant Background
The trial testimony took less than one day to present. Gallup and Clinton were the only witnesses to testify on the substantive claims. Gallup testified that he sold energy or electricity contracts for a company called Hudson Energy. In 2010 or 2011, he and other representatives were "shuffled" to a broker called Aldar Marketing. From that point forward, commissions that Gallup formerly received directly from Hudson Energy were first paid to Aldar Marketing and then to Gallup. Generally, Gallup and other salespersons would receive commissions on the accounts they developed.
Like Gallup, Clinton also sold energy contracts for Hudson Energy and received commission payments through Aldar Marketing. Eventually, Clinton and others began to operate as Marathon Energy to "basically do the same thing that Aldar was doing," in that Marathon Energy entered into a sales partnership with Hudson Energy. Gallup's key contention here is that Hudson Energy paid commissions to Marathon Energy relating to accounts Gallup developed, but Marathon Energy did not pass along those commissions to Gallup, as Aldar Marketing did. According to Gallup, he had an oral agreement with Clinton that Gallup would receive those commissions after they were paid to Marathon Energy. The parties stipulated that Marathon Energy received from Hudson Energy commissions on accounts Gallup developed in the amount of $13,861.
Gallup asserted claims against Clinton for fraud, breach of an oral contract, quantum meruit, and sworn account. All of Gallup's claims are based on his assertion that all or part of the commissions Clinton received from Hudson Energy were owed to Gallup under his oral agreement or understanding with Clinton, but Clinton did not pay them. Clinton testified that he paid a portion of the commissions to Gallup as a "finder's fee."
The trial court awarded judgment to Gallup against Clinton in the amount of $13,861 and signed a conclusion of law that Gallup is entitled to judgment against Clinton for $13,861. Additionally, the court made one fact finding of relevance: "The records of Hudson Energy on file reflect payment of commissions to [Clinton] on the Plaintiff's accounts in the total amount of $13,062." Clinton filed a timely request for additional or amended findings of fact, requesting the court to "issue additional Findings of Fact and Conclusions of Law that states the finding of facts upon which the Judgment was founded ... and how those facts are applied to the elements of the Plaintiffs claims against Defendant Clinton and Marathon for fraud, quantum meruit, suit on a sworn account, breach of contract and for attorney fees." No further findings of fact appear in our record.
The $13,062 figure stated for the commissions paid may or may not be a typographical error. The court awarded attorneys' fees of $13,062; the stipulated amount of commissions Clinton received from Hudson Energy was $13,861.
B. Discussion
The majority says that the trial court must have committed an error of law because it made no fact findings on any element of any of Gallup's claims. Based on rule 299, the majority states that the trial court's sole fact finding "does not resolve any disputed fact concerning any element of any claim asserted by Gallup." Ante at –––– – ––––. Thus, the court cannot presume any findings relating to any claims at issue. Instead, the majority continues, we can "only conclude that the ‘basis of the trial court's judgment’ was its apparent conclusion that the sole fact that Hudson paid money to Clinton, on its own, somehow entitled Gallup to relief." Id. at ––––.
I respectfully disagree with the majority's premise. Viewed in the context of the very limited trial testimony, I would hold that the court's fact finding constitutes a finding on the element of damages. There is no other reasonable way to construe it in light of the evidence. Gallup's only point in support of his claim for damages was that Clinton received commissions on Gallup's accounts from Hudson Energy but failed to pay those commissions to Gallup. The trial court's fact finding that Clinton received commissions on Gallup's accounts in the amount of $13,062 goes directly to Gallup's sole damages theory. Admittedly, the finding is not as specific or definite as it could or should be, and it may be erroneous in amount, but it is nonetheless a finding as contemplated by rule 299 on a required element for each of Gallup's claims. I believe the court errs in holding that the trial court made no findings on any element of Gallup's claims.
Notably, the final judgment contains a statement that: "[t]he Court finds that Plaintiff and Defendant Clinton stipulated that the commissions paid on the accounts of the Plaintiff was $13,861.00."
As Clinton correctly noted below and asserts in our court, the trial court failed to issue findings on any other elements of Gallup's claims. The Texas Rules of Civil Procedure provide a party with the procedural right to request that, following a bench trial, the trial court prepare written findings of fact and conclusions of law. See Tex. R. Civ. P. 296. The trial court has a mandatory duty to issue such findings in response to a timely request. See Tex. R. Civ. P. 297 ; Cherne Indus., Inc. v. Magallanes , 763 S.W.2d 768, 772 (Tex. 1989). Clinton having properly requested findings of fact following a bench trial, the trial court was required to issue them. Failing to do so is error.
Because Clinton properly requested findings on the omitted elements, we may not presume on appeal that the omitted findings support the judgment. See Man Indus. (India), Ltd. v. Midcontinent Express Pipeline, LLC , 407 S.W.3d 342, 370 (Tex. App.—Houston [14th Dist.] 2013, pet. denied). Moreover, a trial court's failure to respond to a timely request for additional findings is presumptively harmful error, unless the appellate record affirmatively shows that the complaining party has suffered no harm. See Cherne Indus., Inc. , 763 S.W.2d at 772 ; Watts v. Oliver , 396 S.W.3d 124, 130 (Tex. App.—Houston [14th Dist.] 2013, no pet.). The general rule is that an appellant has been harmed if, under the circumstances of the case, he is forced to guess the reason(s) why the trial court ruled against him. Larry F. Smith, Inc. v. Weber Co., Inc. , 110 S.W.3d 611, 614 (Tex. App.—Dallas 2003, pet. denied). If only a single ground of recovery or defense is at issue, the record typically would not show harm because the appellant is not forced to guess the reasons underlying the trial court's judgment. See id. ; Nevada Gold & Silver, Inc. v. Andrews Indep. Sch. Dist. , 225 S.W.3d 68, 77 (Tex. App.—El Paso 2005, no pet.). On the other hand, when multiple grounds for recovery or multiple defenses are in play, as here, an appellant is forced to guess the trial court's findings, unless they are provided to him. Larry F. Smith , 110 S.W.3d at 614 ; Nevada Gold & Silver , 225 S.W.3d at 77. Our court has stated that, generally, the inference of harm cannot be overcome in cases with disputed facts and two or more grounds for recovery or defense. See Randall v. Jennings , 788 S.W.2d 931, 932 (Tex. App.—Houston [14th Dist.] 1990, no writ), overruled on other grounds as recognized in Zieba v. Martin , 928 S.W.2d 782, 786 n.2 (Tex. App.—Houston [14th Dist.] 1996, no writ). Placing an appellant in the position of having to guess the trial court's reasons for rendering judgment against him defeats the inherent purpose of rules 296 and 297. Larry F. Smith , 110 S.W.3d at 614. The purpose of a request under the rules is to "narrow the bases of the judgment to only a portion of [the multiple] claims and defenses, thereby reducing the number of contentions that the appellant must raise on appeal." Id. Without findings of fact and conclusions of law on all elements of Gallup's claims, Clinton is forced to guess at the underlying basis for the trial court's judgment.
Thus, I would hold that the trial court committed reversible error in failing to file additional findings of fact. The remaining question is the proper disposition. The preferable remedy in this type of situation is for the appellate court to abate the appeal and remand the case to the trial court to cure the error by issuing additional findings and conclusions. See Liberty Mut. Fire Ins. Co. v. Laca , 243 S.W.3d 791, 794 (Tex. App.—El Paso 2007, no pet.). The judge presiding over this trial was the Honorable John T. Wooldridge, who was not the elected judge of the County Court at Law Number Two of Harris County in December 2018 when this case was tried, but who sat by assignment. Judge Wooldridge heard the evidence and signed the findings of fact. In this instance, I would abate the appeal and remand with instructions for the Honorable John T. Wooldridge to issue additional findings of fact. See City of Los Fresnos v. Gonzalez , 830 S.W.2d 627, 630 (Tex. App.—Corpus Christi 1992, no writ) (op. on reh'g) (abating appeal for visiting judge who presided over trial to issue findings of fact and conclusions of law).
The majority remands the case for further proceedings, but it does so by holding that the judge signed no findings on any element of any claim. This erroneous conclusion leads to an ill-advised determination that the trial court must have "committed an error of law." Ante at ––––. I prefer to avoid that sort of conjecture in favor of abating the appeal and seeking express findings showing the basis of the judgment. Once additional findings of fact are signed, it may become readily apparent that the trial court committed no error of law, contrary to the majority's statement.